SEC Moves Court Linking Adani Fraud Case to Former Azure Director's Bribery Probe

New Delhi: The US Securities and Exchange Commission (SEC) on Thursday, December 5, filed a notice urging the judge in the civil case against billionaire Gautam Adani for securities fraud to deem it related to the case against former Azure Power Global director Cyril Cabanes, who is accused of violating the Foreign Corrupt Practices Act (FCPA). The move seeks to ensure both cases are assigned to the same court.

Last month, the SEC and the US Attorney’s Office for the Eastern District of New York charged Adani with alleged involvement in what they described as a “massive bribery scheme” involving millions of dollars paid to state government officials. The Adani group has dismissed the allegations as baseless.

Currently, three cases related to these charges are ongoing in the Eastern District Court of New York. This includes a criminal case filed by the Department of Justice against Adani and seven others, alleging conspiracies to commit securities fraud and wire fraud, along with substantive securities fraud.

The SEC has also filed a civil case against Adani and his nephew, Sagar Adani, accusing them of misleading US investors with false assertions during a 2021 debt offering by Adani Green Energy Limited. Separately, a case alleging violations of the FCPA has been filed against Cabanes, a former director of Azure Power, whose stock was traded on the New York Stock Exchange until November 2023. In both the civil cases, summons had been issued for all three defendants, as per court filings.

The SEC’s counsel, Christopher Colorado, submitted a letter on Thursday to judge Vera Scanlon of the Eastern District of New York, presiding over the SEC v. Adani et al case, “to respectfully request that another action pending in this Court, SEC v. Cabanes, 24-cv-08081-BMC (“Cabanes Civil Case”), be deemed related to this action."

The letter explained that “because this matter and the Cabanes Civil Case rest on overlapping facts (and, we anticipate, overlapping evidence) and arise from the same transactions or events, substantial judicial resources may be saved by both cases being assigned to the same District Court and/or Magistrate Judge, consistent with Division of Business Rule 3(b).”

According to the SEC counsel, Sagar Adani’s lawyer indicated they “do not have any position to share” on this request, while Gautam Adani’s counsel did not respond.

The letter further noted that the criminal case against Adani is also based on “substantially the same transactions or events as both this case and the Cabanes Civil Case – namely, the scheme to bribe Indian state officials to secure contracts that benefitted Adani Green and Azure, and false and misleading statements to investors in Adani Green’s 2021 debt offering concerning that bribery scheme.” Cabanes, identified as a French citizen residing in Singapore, is also a defendant in the criminal case filed in the Eastern District of New York.

The SEC’s initial complaint alleged that, as a director of Azure, Cabanes was involved in a “massive bribery scheme” to secure energy projects for Azure and Adani Green. He served on Azure’s board as a representative of Caisse de dépôt et placement du Québec (CDPQ), a Canada-based pension fund and Azure’s largest stakeholder.

Earlier this year, Cabanes joined MorGen Energy, a hydrogen development firm, as its chief executive officer. According to the Financial Times, Trafigura, the trading company that holds a majority stake in MorGen Energy, announced that Cabanes would “step back from his day-to-day responsibilities” while the matter was under review. Meanwhile, CDPQ stated that it had terminated Cabanes and two other individuals mentioned in the DOJ indictment in 2023.

In response to the allegations, Adani Green Energy, in a regulatory filing with the Bombay Stock Exchange and the National Stock Exchange, emphasised that its directors – Gautam Adani, Sagar Adani and Vneet Jaain – were not charged under the FCPA.

“Mr. Gautam Adani, Mr. Sagar Adani and Mr. Vneet Jaain have not been charged with any violation of the FCPA in the counts set forth in the indictment of the US DOJ or civil complaint of the US SEC,” the company stated on November 27.

This position was echoed by senior counsel and former attorney general Mukul Rohatgi, who held a press conference in Mumbai the same day. Rohatgi highlighted that Gautam and Sagar Adani were not charged in two key counts related to the FCPA, which he described as “more important than the others.” While Rohatgi has represented Adani in several hearings, he clarified that his comments were his personal legal views and not on behalf of the Adani Group.

Also read: Solar Sector in Crisis: US Bribery Charges Against Adani Group, Azure Power Spark Widespread Concern

The charges filed in the US court have triggered significant economic and political repercussions. Reports indicate that the Adani Group's listed companies initially lost up to $34 billion in combined market value, though their stocks have since regained some of that ground.

Andhra Pradesh, the state at the centre of the bribery allegations, is considering cancelling the power contract with Adani. Kenya had cancelled two infrastructure projects with the Adani Group, while French energy company TotalEnergies announced that it will “not make any new financial contribution as part of its investments in the Adani group of companies” until the accusations have been clarified.

The indictment against Gautam Adani has prompted the US International Development Finance Corporation to review its plan to provide $550 million in funding for a port development project in Sri Lanka, partially owned by the Adani Group.

In Bangladesh, a committee has been formed to investigate power generation contracts signed during the tenure of former Prime Minister Sheikh Hasina, including one with Adani Power.

Meanwhile, the parliament witnessed a complete washout of its first week of proceedings, as the opposition demanded a discussion and an investigation into the charges against Adani, who is widely considered to be close to Prime Minister Narendra Modi.

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